Analysis: Will hospital price transparency rule actually allow patients to shop for care?

Though the price transparency rule aims to make it easier for healthcare consumers to compare prices, there is a lack of standardization in how hospitals present the data, making it hard for consumers to shop around for care, a new analysis shows.

One of the goals of the federal hospital price transparency rule is to enable patients to compare the cost of services when making healthcare decisions. But the rule may not actually make this possible, according to a new analysis.

Though it may be possible to compare prices within a given hospital, the price of a service from one provider might not be directly comparable to that of the same service from another, the analysis shows. This is largely due to inconsistencies in how hospitals are presenting the data.

Despite push back from providers, the Centers for Medicare and Medicaid’s hospital price transparency rule took effect Jan. 1. The rule requires hospitals to make pricing information publicly available for at least 300 common services and items, including the prices they negotiate with payers. They must present prices in two ways: as a machine-readable file with all items and services, and as a display of shoppable services in a consumer-friendly format.

Further, the prices must be listed with both the name of the payer and the health plan with which it is associated, as insurers can negotiate different rates for services under different plans.

Published by the Kaiser Family Foundation and the Peterson Center on Healthcare, the new report examines data from the websites of the two largest adult hospitals in each of the 50 states and the District of Columbia.

The prices for services and items not only vary greatly between hospitals, insurance markets and cities, but also within a single hospital facility, the report states.

For example, the payer-negotiated rates for an MRI of the lower spine at the University of New Mexico Hospitals range from between $221 and $331 for Medicare Advantage plans to between $486 and $1,821 for private insurance plans.

While data provided by hospitals to comply with the price transparency rule can allow for comparison of prices within a facility, comparing prices across facilities is difficult due to a lack of standardization, according to the report.

There are several reasons why the disclosed prices do not allow for an apples-to-apples comparison, including the fact that it’s not clear what is included in the price estimate. Some hospitals included both facility and professional fees — such as for physician services — in their estimate, while others only included the facility fee.

Not only that, but hospitals do not appear to have a standard process for measuring price. Typically, “standard rate” is taken to mean hospitals’ gross charge, but many hospitals used different terminology indicating a potentially different way of measuring price. Commonly used terminology included “average charge,” “median charge,” or “estimate,” the report states.

In addition, the price information provided in machine-readable files was often not complete, and estimates for the same service differed between the files and the hospital’s consumer-friendly tool.

“For price transparency data to be useful in making comparisons across hospitals, data in the files would need to follow a set template, such that all hospitals use consistent file formats, billing codes, service descriptions, and insurer and market naming formats,” the report states.

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